The Bombay High Court has quashed a customs demand exceeding ₹14 crore against an electric vehicle manufacturer, holding that an adjudicating authority cannot reject a detailed technical expert opinion on the basis of its own assumptions without providing a reasoned scientific rebuttal or obtaining a counter-expert opinion.
A Division Bench of Justice M.S. Karnik and Justice Sandesh D. Patil remanded the matter to the Principal Commissioner of Customs (Import), Air Cargo Complex, Mumbai, for fresh adjudication.
The dispute concerned the customs treatment of Battery Management Systems (BMS) and Cell Supervisory Circuits (CSC) imported by the petitioner company for use in the manufacture of lithium-ion battery packs for electric vehicles.
Buy Now: Customs Duty E-Magazine – August 2026
The company had claimed the concessional Basic Customs Duty rate of 2.5% under Serial No. 512 of Notification No. 50/2017-Customs dated June 30, 2017. The exemption covers parts, components, accessories and sub-parts used in manufacturing lithium-ion batteries and battery packs, but expressly excludes lithium-ion cells and Printed Circuit Board Assemblies (PCBAs).
The Principal Commissioner of Customs denied the concessional rate after concluding that the imported BMS and CSC were PCBAs and therefore fell within the exclusion contained in Serial No. 512 of the exemption notification.
Consequently, the adjudicating authority confirmed a differential customs duty demand of ₹14,07,47,215, along with applicable interest and penalty under the Customs Act, 1962.
The company had declared the BMS under Customs Tariff Heading 9032 8990 and the CSC under headings 8537 1000 or 8537 1090.
The Customs Department, however, maintained that the goods were appropriately classifiable under Customs Tariff Heading 8507 9090 as parts of electric accumulators. According to the Department, the BMS and CSC were specifically designed for and used in lithium-ion battery packs.
The Department contended that these components perform functions such as monitoring voltage, current and temperature, balancing individual cells, preventing overcharging and over-discharging, enabling communication, and ensuring the safe operation of lithium-ion battery packs.
Relying upon Chapter Note 3 to Chapter 85, HSN Explanatory Notes and Note 2(b) to Section XVI of the Customs Tariff, the Department argued that components contributing to the functioning and protection of electric accumulators should be classified as parts of those accumulators.
It further contended that since the imported goods were PCBAs, they were expressly excluded from the concessional customs duty benefit.
During the customs adjudication, the company relied on a technical expert opinion dated July 17, 2025, obtained from the Veermata Jijabai Technological Institute, Mumbai.
The High Court noted that VJTI is a premier engineering institution and has a specific electric vehicle automotive division. The institution had physically inspected the imported products and undertaken a detailed component-level analysis.
On the basis of its examination, VJTI unequivocally concluded that BMS and CSC could not themselves be understood as PCBAs used in manufacturing battery packs.
The Principal Commissioner rejected the relevance of this expert opinion, observing that PCBA is an electronics terminology universally applicable to devices and machinery. The adjudicating authority did not obtain any counter-expert opinion, independent technical testing or comparable scientific material to rebut the VJTI findings.
The company argued that the Commissioner had effectively substituted his own technical understanding for that of an independent expert institution without identifying any scientific basis for rejecting the report.
The High Court observed that the decisive issue was whether the imported BMS and CSC were liable to be treated as PCBAs. If they were PCBAs, the goods would clearly stand excluded from the exemption notification.
The Court, however, found that the customs authority had simply brushed aside the VJTI opinion by calling it irrelevant.
The Bench held that where classification or taxability depends upon specialised technical or scientific considerations, an adjudicating authority must meaningfully evaluate an expert opinion. If the authority intends to disagree with such an opinion, it must support its conclusion with corresponding expert or scientific material and cannot rely merely on subjective assumptions.
Referring to the Supreme Court’s decision in Commissioner of Income Tax v. Bharti Cellular Limited, the Bench noted that technical evidence assists tribunals and courts in deciding disputes involving complex technological matters on a proper factual foundation.
The High Court also relied upon its earlier ruling in Monopoly Innovations Pvt. Ltd. v. Union of India, in which it was held that an adjudicating authority should obtain a counter-expert opinion before rejecting a technical report where its own observations are not founded upon an identifiable scientific basis.
The Court further referred to decisions in Parle Agro (P) Ltd., Shahnaz Ayurvedics, Panama Chemical Works and Neena Uppal to reiterate that specialised expert evidence cannot be rejected on the adjudicating authority’s unsupported technical perception.
The Bench found that the VJTI report was based on the physical inspection of the imported goods and a detailed component-level analysis.
In such circumstances, the Court held, the report should not have been lightly rejected by substituting the adjudicating authority’s own technical perception without a reasoned rebuttal.
The Court clarified that an adjudicating authority may, in an appropriate case, reach a conclusion on the basis of the entire technical record without obtaining a counter-expert opinion. However, in the facts of the present case, a reasoned technical rebuttal was necessary because the report came from a recognised engineering institution and was based on a physical and component-level examination.
The Commissioner was free to obtain a counter-expert opinion and thereafter analyse the correctness of the VJTI report. What was impermissible was the summary rejection of that report merely by stating that it was irrelevant.
The Customs Department raised a preliminary objection to the maintainability of the writ petition, arguing that the company had an alternative statutory remedy of appeal before the Customs, Excise and Service Tax Appellate Tribunal under Section 129A of the Customs Act.
The High Court declined to relegate the company to the appellate remedy.
It observed that the issue regarding the treatment of expert evidence was squarely covered by the decisions in Bharti Cellular and Monopoly Innovations. The challenge was directed at the manner in which a specialised technical issue had been adjudicated rather than merely at the correctness of the final classification.
The Bench nevertheless clarified that its intervention was based on the particular facts of the case and should not be understood to mean that a counter-expert opinion would be mandatory whenever a technical objection is raised in a customs exemption dispute.
Allowing the writ petition, the High Court quashed the Order-in-Original dated December 20, 2025, including the differential duty demand of ₹14.07 crore, interest and penalty.
The matter was remanded to the Principal Commissioner of Customs (Import) for fresh adjudication of the show-cause notice on its merits and in accordance with law.
The Court permitted the Commissioner to obtain a counter-expert opinion before reconsidering the VJTI report. The adjudicating authority was directed to provide the company an opportunity of hearing and conclude the proceedings expeditiously.
The High Court did not finally decide whether the imported BMS and CSC qualify as PCBAs or whether they are eligible for the concessional rate of customs duty. Those questions have been left open for reconsideration during the fresh adjudication.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
Read More: Customs Seizure of Roasted Areca Nuts Quashed After FSSAI Clearance: Bombay High Court
